Judges Rule That EPA Can’t Conjure Up New Permit Veto Authority

Navigating the environmental permitting gauntlet requires substantial time and financial resources. So once you obtain a permit, you should be able to rely on it, and shouldn’t have to worry about a federal agency coming along and conjuring up a way to make it disappear.

In the past year, coal companies and several states have accused the Environmental Protection Agency (EPA) of such regulatory alchemy in two separate lawsuits. Much to the chagrin of environmental activists, neither presiding judge bowed down to EPA’s expertise nor gave deference to its sweeping assertion of authority.

EPA has already signaled its intention to appeal one loss, Mingo Logan Coal Co. v. EPA. The Clean Water Act (CWA) authorizes the Army Corps of Engineers to issue water discharge permits, while also giving EPA advisory authority as well as the ability to “veto” a permit by prohibiting the Corps from specifying a designed area as a disposal site. Mingo obtained a permit from the Corps in 2007 related to mountaintop mining in West Virginia. In September 2009, EPA asked the Corps to suspend Mingo’s permit. After the Corps refused, EPA took an unprecedented step: it retroactively prohibited the Corps from designating two mountain streams as disposal sites. The move shut down a mining project which employed 250 workers and which was in full compliance with the permit.

Mingo sued, arguing that EPA exceeded its regulatory role for discharge permits under the CWA. Judge Amy Berman Jackson found that CWA § 404(c), while somewhat ambiguous, “does not clearly state that the EPA can withdraw its consent at any time or whenever it sees fit.” Her review of the CWA as a whole and its legislative history lent no support for EPA’s position. She also held that while EPA’s view of its authority merits some deference, its interpretation was entirely “illogical and impractical.” No statutory provision or rule describes how a written permit would simply cease to exist — “poof” as the judge put it — upon EPA’s withdrawal of discharge consent. Such an outcome runs counter to the shared responsibilities of EPA and the Corps and “sow(s) a lack of certainty into a system that was expressly intended to provide finality.”

EPA’s outsized view of its authority took another hit July 31 from Judge Reggie Walton in National Mining Association (NMA) v. Jackson. There, NMA and several coal-rich states argued that EPA improperly injected itself into the surface mining permitting process through a clean water guidance document. Congress tasked the Interior Department with administering the Surface Mining Control and Reclamation Act (SMCRA), a responsibility which included overseeing permitting programs run by individual states. Interior must seek and receive EPA’s written concurrence when a state’s SMCRA program implicates water quality. EPA’s guidance, the states and NMA argued, went beyond that role and directly involved the agency on a permit-by-permit basis.

Just as in Mingo Logan Coal, the agency argued that Judge Walton should defer to EPA’s broad view of its authority under the CWA. The court found that the SMCRA unambiguously empowers the Interior Department and the states with permitting oversight, and that EPA’s permitting guidance went beyond its limited statutory role.

Environmental permits support over $220 billion in investments each year. Congress did not want to centralize authority over such a huge amount of commerce in one regulator, so it deliberately diffused responsibility and attempted to draw lines of authority. The often crooked and blurry nature of those lines can encourage power plays by aggressive agencies like EPA. Judges Jackson and Walton properly reined EPA in, and we trust that the U.S. Court of Appeals for the D.C. Circuit will adopt and fortify the judges’ rationale when reviewing Mingo Logan Coal and NAM.